If you want to start a company that is community-serving or member-serving and that has a particular “mission” other than lining the pockets of the owners, you may want to consider forming a 501(c)3 nonprofit organization. 501(c)3 refers to the particular tax exemption under the United States Internal Revenue Code that applies to this type of organization. If you are unsure whether nonprofit status is right for you, you should never hesitate to consult with an experienced California business attorney.
Choose the name of your corporation – Choosing an appropriate name for your nonprofit may not be as easy as you may believe. The name must be available with the California Secretary of State and should not potentially infringe on any existing trademarks with the U.S. Patent and Trademark Office (USPTO).
Establish your board of directors – You must decide how many directors you want for your nonprofit (you must have at least one) and your should recruit and name these directors in writing.
Incorporate – The process of incorporation can be complicated and involves drafting and filing significant paperwork. You must draft the Articles of Incorporation in line with California corporate nonprofit law, which requires you include specific language and provisions. You must also draft the bylaws for internal procedures and rules of the corporations, as well as a Statement of Information to be filed with the Secretary of State. You must also hold the first meeting and take the initial board actions to establish the corporation.
Obtain an EIN (Employer Identification Number) – Any business with at least one employee must apply for and receive an EIN for tax purposes.
Register with the California Registry of Charitable Trusts – Within 30 days of receiving your first donations, you must file specific registration forms with the Office of the Attorney General's Registry of Charitable Trusts.
Apply for federal and state tax exemptions – In order to receive nonprofit tax status under 501(c)3, you must apply for exemptions with both the Internal Revenue Service and the State of California Franchise Tax Board.
Contact an attorney today to schedule a consultation
As you can see, there are many different steps involved in successfully forming a 501(c)3 nonprofit organization. Because you do not want to risk tax or legal complications, you should seek the guidance of an experienced business lawyer who understands nonprofit laws in California. Please feel free to call the Law Offices of Nate Kelly for assistance today.
About the Author
Nate Kelly is a California attorney who has been helping businesses and individuals with a variety of legal matters since 2009. In addition to his private practice, he is also co-chair of USC Law Network, which enables him to call upon the legal expertise and acumen of over 30 lawyers in a variety of fields. With offices in both Los Angeles and San Francisco, Mr. Kelly is capable of providing quality legal counsel and representation across the state of California. To schedule an appointment with Mr. Kelly, please call our office today at 415-336-3001 (San Francisco) or 310-228-6215 (Los Angeles). Prospective clients can also send Mr. Kelly an email through our online contact form.